PRELIMINARY SUBMISSION TO THE PILOTAGE ACT REVIEW

Transcription

1 PRELIMINARY SUBMISSION TO THE PILOTAGE ACT REVIEW NOVEMBER 1, 2017

2 Chamber of Shipping Submission to the Pilotage Act Review 2017 Contents Chamber of Shipping Submission to the Pilotage Act Review... 2 Executive Summary... 2 Introduction... 4 Governance... 5 Clear Authority... 5 Board Composition & Responsibilities... 6 Contracts for Service... 7 Regulatory Powers... 9 Liability and Enforcement... 9 Safety Licensing and Certification Compulsory Pilotage Areas Pilotage Risk Management Methodology (PRMM) Technology Waivers Labour Models Final Offer Selection Tariff Setting Process Services Fee Act Dispute Resolution Other Sources of Revenue Economic and Public Policy Considerations Emerging Issues Enforcement P a g e

3 Chamber of Shipping Submission to the Pilotage Act Review Executive Summary The Pilotage Act enacted in 1972 by the Royal Commission on Pilotage has facilitated the growth of Canada s trade overseas over the last 45 years, during which international seaborne trade has nearly quadrupled from 2.6 Billion tons to 10.3 Billion tons in The Pilotage Act has supported the shipping industry s ability to expand operations and maintain its social license in Canada with 99% of all assignments completed without a safety incident across all Authorities almost every year. However, new demands on pilotage services, advancements in technology and the lack of oversight on the monopolies enshrined in the Pilotage Act can no longer be ignored. The Chamber of Shipping s recommendations are summarized as follows: 1. Empower the pilotage authorities with the required expertise to make regulatory and operational decisions with respect to pilotage only. 2. Establish a National Pilotage Board to drive standards and consistency across the regions. 3. Define the desired composition of the expanded Board within the Pilotage Act to ensure that the relevant expertise and representation is included. 4. Board appointments to be subject to the Conflict of Interest Act. 5. Adopt IALA s recommendations on best practices for competent Pilotage Authorities. 6. Co-locate regional pilotage dispatchers with the Canadian Coast Guard Marine Communications Traffic Service to improve situational awareness. 7. Contracts for service with pilot corporations must be fully disclosed. 8. Require pilot contracts to have service delivery commitments, performance indicators and eliminate any reference or involvement to activities that are the responsibility of the Pilotage Authorities. 9. Provide the Pilotage Authorities with sufficient powers to order a pilot to move a vessel when placed in the wrong location, and/or where immediate safety and environmental risks are posed. 10. Increase a licensed pilot s limitation of liability to a reasonable level. 11. Provide Pilotage Authorities with access to federal grants for research and development. 12. Appoint a central Pilotage Authority or Transport Canada to establish pilot entry, certification and training requirements. 13. Require a review of compulsory pilotage areas every 5 years. 14. Consider tiers within the compulsory pilotage area, i.e. where remote pilotage can be introduced to reduce the distance that pilots are required to be on board. 1 United Nations Conference on Trade and Development, Review of Maritime Transport P a g e

4 15. Pilotage Risk Management Methodology exercises should be funded by Transport Canada to allow for greater application and avoid any potential bias. 16. Pilot corporations should also be eligible for research and development funds. 17. The criteria for waivers should be reviewed and updated every five years. 18. Maintain the final offer selection to avoid disruption in trade. 19. Evaluate if the Services Fee Act will serve as a better mechanism for fee adjustments. 20. Consider dispute resolution process under the Services Fee Act if the CTA amendments establishing clear timelines are not passed. 21. Allow the Pilotage Authorities to set tariffs and/or recover fees for efforts that are not associated to the delivery of pilotage direct services. 22. Increase the level of fines for non-compliance under the Pilotage Act to ensure that the cost of pursuing a fine are adequately recovered. 3 P a g e

5 Introduction Marine pilotage is an essential component to the safety of navigation along Canadian coasts, ports, and inland waterways. Inclusion of the Pilotage Act Review (the Review ) along with the commitments under the $1.5 Billion Oceans Protection Plan announced by the Prime Minister, the Right Honourable Justin Trudeau, on November 7, 2016 confirms that pilotage is a key element in supporting marine safety and protecting the marine environment. The Chamber of Shipping embraces the vision of the Oceans Protection Plan as the operating environment for commercial shipping is becoming increasingly complex and challenging with changing ecosystems, supply chain limitations, and larger vessels. The Review provides an opportunity to update and redesign the marine safety framework while taking into account increasing coastal protection and opportunities for change as new technology becomes available. The inability for pilotage to adapt quickly to commercial needs or new precautionary measures that may be implemented by the federal government results often in a significant financial burden to the users of pilotage services. In the Canadian Marine Pilots Association s cost benefits analysis of Marine Pilotage in Canada released in March 2017, Exhibit 3-7 shows a significant range of net benefits from $ to $1,933, indicating that the cost of pilotage varies significantly between the regions. This suggests that pilotage requirements are inconsistent and possibly excessive with respect to the level of influence and associated risks in certain areas. Our vision for pilotage is one that evolves over time and is integral to a pro-active vessel management scheme that supports and protects established low-risk marine corridors. Technology and access to more real-time information will play an increasing role in the safe transit of vessels throughout compulsory pilotage areas. 4 P a g e

6 Governance The Pilotage Act restricts the ability for pilotage to evolve and adapt quickly to the changing needs of industry and favours the interests of the pilot corporations. While pilotage monopolies are common worldwide, the legislative framework that governs monopolistic corporations must promote transparency, accountability, and clear lines of authority. CLEAR AUTHORITY - Today marine pilots are often viewed by industry and external stakeholders as a regulator as the rule of law that separates the pilotage authority and the pilot corporation is ambiguous. By the nature of their profession and in the absence of a vibrant domestic deep-sea fleet, pilots are recognized as the most experienced navigators on the coast and are largely relied upon to provide technical expertise to the Pilotage Authorities on many navigational and environmental safety issues. Unfortunately, decisions rendered on pilotage requirements are often made without considering experiences or best practices demonstrated in other jurisdictions. Ship owners attempts to garner support for trials to prove the capability of shipboard equipment are often met with resistance by the pilots. Pilotage Authorities should have the competencies to provide impartial assessments when requested. Just recently the Vancouver Fraser Port Authority updated its Port Information Guide with new protocols for vessels moving through the First Narrows movement restricted area (MRA-1). The protocol published in the update describes informal procedures that have been put in place by pilots over several years in the absence of a pro-active vessel management scheme that one would expect to be established by the Canadian Coast Guard s Marine Communications and Traffic Services (MTSC) or the port authority. In the absence of any guidelines or regulations, the pilots are often relied upon to take charge of the situation. There must be a clear separation of duties between the regulators and the pilot corporations. For this to happen, the federal agencies must have the appropriate expertise and authority. Under the Oceans Protection Plan, Transport Canada, Fisheries and Ocean, and the Canadian Coast Guard have been provided funds to acquire resources and powers to direct vessels and establish the appropriate safety and operating parameters under the Canada Shipping Act and the Navigable Waters Protection Act. These changes are essential to support the acceptance of technology to augment pilotage services and any advancements towards remote pilotage. 1. Empower the pilotage authorities with the required expertise to make regulatory and operational decisions with respect to pilotage only. 5 P a g e

7 BOARD COMPOSITION & RESPONSIBILITIES Each pilotage authority has a Board appointed by the Minister of Transport typically through recommendations by industry and pilot corporations. The composition of the Board includes a Chair and two industry representatives, two pilot corporation representatives, and two public appointees. This structure is not defined in the Pilotage Act and has now fallen under the Governor in Council appointment process that is open to the public to infuse greater integrity in public institutions by eliminating any conflicts of interest. The Board composition does require due consideration in view of efforts to standardize certain components in the delivery of pilotage services. The Chamber of Shipping supports the creation of an amalgamated National Board to administer the Pilotage Act. However, the composition should be defined in the Act to ensure that representation on the Board is distributed in a manner that reflects the level of existing and potential pilotage activity in each region. Experienced Master Mariners, ideally with experience operating in Canadian waters, should account for a majority of the directors, while representatives from the federal and provincial governments, First Nations, and shippers would support the remaining positions on the Board. Recognized Master Mariners will be significant in providing the expertise that was previously provided by members of the pilot corporations. All candidates should be subject to the Conflict of Interest Act. A National Board would need to have the competencies and/or resources from Transport Canada to establish consistent entry and recruitment requirements, and minimum qualifications and training requirements for pilots and pilotage related personnel across Canada. Other responsibilities would include setting standards for safe working conditions including rest periods, waivers, and equipment standards. The International Association of Marine Aids to Navigation and Lighthouse Authorities (IALA) Report on Best Practice for Competent Pilotage Authorities (revised June 2012) provides the responsibilities for a competent Pilotage Authority. The Chamber of Shipping fully endorses the report s suggestion that a National Pilotage Authorities should establish policies and overall objective for pilotage, including, but not limited to: promulgating and enforcing statutes and regulations on pilotage; determining areas and ships that require mandatory pilotage; determining or approving pilot boarding and disembarking areas; recruiting and selection requirements; minimum qualifications and training requirements for pilots and pilotage related personnel; certification and licensing standards; licensing, revocation and suspension procedures; Pilot Exemption Certificate (PEC) procedures; pilotage dispensations; safe working conditions including rest periods; 6 P a g e

8 equipment standards; standards for a Quality Management System; ensuring that non-conformities, accidents and hazardous occurrences are reported in an approved system; ensuring that every pilotage service provider is established according to regulations; and ensuring supervision of the pilotage service provider. It is expected that regional offices will exist to manage the operational elements of the Pilotage Authorities operations, including the dispatch of pilots and transportation services. Ideally, the regional offices would be co-located with a Coast Guard Marine Communications and Traffic Service (MCTS) centre, offering greater marine domain awareness. s 2. Establish a National Pilotage Board to drive standards and consistency across the regions. 3. Define the desired composition of the expanded Board within the Pilotage Act to ensure that the relevant expertise and representation is included. 4. All directors would be subject to the Conflict of Interest Act. 5. Adopt IALA s recommendations on best practices for competent Pilotage Authorities. 6. Co-locate pilotage dispatchers with the Canadian Coast Guard Marine Communications Traffic Service to improve situational awareness. CONTRACTS FOR SERVICE - Pilot corporations are regulated monopolies that are actively involved in the governance of pilotage. While it is unclear how much influence each Pilotage Authority Board has on contract negotiations with the pilot corporations, the fact that there is an opportunity to influence is inappropriate. The Authorities contracts with pilot corporations are not available or transparent to the user group that pays 110% of the services provided by the pilot corporations. Industry has no direct involvement in the negotiations, mediation or final offer selection process, and Pilotage Authorities are expected to be financially self-sustaining. The current process of negotiations is restricted to the Pilotage Authorities and the pilot corporation and this has fostered the continuation of questionable and outdated provisions that must be compensated by industry. Industry demands greater transparency and involvement in the contract negotiations to drive greater efficiencies in pilotage services. The contracts should have a service oriented approach with performance requirements and benchmarks, and any references to licensing pilots or other regulatory matters should be excluded. Industry should no longer have to pay for callbacks at times when there are insufficient pilots available to perform the jobs requested. 7 P a g e

9 The chart below shows the estimated cost of callbacks for the Pacific region estimated through to 2030 and estimates are based on the BC Coast Pilots Ltd. (BCCP) manpower and ratings. At the Chamber of Shipping s request there was request that the callback costs to industry be capped at $500k during the last negotiations as the 2014 cost of $1.3M for callbacks was significantly over budget. It is understood that an agreement was reached for the contract that included an acceptable amount paid for callbacks as approximately 1% of BCCP revenue or $500k each year. However, details of the Letter of Understanding supporting the cap has not been shared. Source: Pacific Pilotage Authority Regulated monopolies must be held accountable for service delivery and performance. Proposed amendments in Bill C-49, An Act to amend the Canada Transportation Act and other Acts respecting transportation, extends the Governor in Council s power to make regulations requiring major railway companies to provide to the Minister of Transport and the Canadian Transportation Agency with information relating to rates, services and performance. The Canada Transportation Act, may be the appropriate piece of legislation to enforce greater transparency with pilotage corporations. Contracts with pilot corporations should exclude any reference to licensing pilots as these licenses should be issued by a government authority or by the proposed national Board to avoid any conflict of interest. Furthermore, contracts should not include any revenue guarantee. Corporations are expected to best manage their operations and are typically responsible for training their members to ensure they maintain their license. The Pilotage Act supports the corporation and avoids competitive pilotage by requiring pilots to be an employee pilot or a member of the corporation. The benefits of a competitive pilotage system are questionable, as a competitive environment would introduce commercial pressures that could have a negative impact on pilot performance, safety culture, risk, hazard reporting, fatigue management and training. The Act should, however, be amended to allow for additional entities or corporations to be formed within a region to provide pilotage services direct to specific ship operators or marine facilities. 8 P a g e

10 s 7. Contracts for service with pilot corporations must be fully disclosed. 8. Require pilot contracts to have service delivery commitments, performance indicators and eliminate any reference or involvement to activities that are the responsibility of the Pilotage Authorities. REGULATORY POWERS Regulatory powers delegated to each Authority under the Pilotage Act, section 20, creates regional inconsistencies in qualifications, training, and services due to different levels of risk tolerance and influence. Restricting the regulatory powers to one authority is the obvious way to impose standards on qualifications and waivers. In addition, the Authorities should be given the necessary powers to direct a pilot to move a vessel in circumstances when the vessel was placed in the wrong location, and/or where immediate safety and environmental risks are posed 9. Provide the Pilotage Authorities with sufficient powers to order a pilot to move a vessel when placed in the wrong location, and/or where immediate safety and environmental risks are posed. LIABILITY AND ENFORCEMENT Under the Pilotage Act, section 40, the limitation of liability for a licensed pilot is set at $1,000 for any damage or loss by his fault, neglect or want of skill. The limitation of $1,000 is insufficient and should be increased to a level that is more punitive. However, we caution that the level be reasonable as pilots may become more risk adverse and demand excessive risk mitigation measures if the exposure to liability is set at a high level. We believe that pilots may be held accountable for negligence and wilful conduct that cause harm to the environment under other statutes. 10. Increase a licensed pilot s limitation of liability to a reasonable level. FINANCIAL PROVISIONS Pilotage Authorities are required to be financially self-sufficient which can sometimes hinder the development of new technology or practices. Borrowing powers are restricted to defraying its expenses and levels are fixed by the Governor in Council. As Pilotage Authorities are likely to be the entity to drive and support new technology and/or projects that will generate system-wide efficiencies, Pilotage Authorities should be given the ability to access funds directly for trials, research and development. Recent amendments under Bill C-49, the Transportation Modernization Act, makes amendments to the Canada Marine Act, to allow port authorities access to funds under the Canada Infrastructure Bank. Amendments to the Pilotage Act could provide Authorities with similar access to 9 P a g e

11 federal funds, such as the National Transportation Corridor Fund, to expedite the introduction of new technologies. 11. Provide Pilotage Authorities with access to federal grants for research and development. Safety Safety is paramount in all coastal and inland waterways and the Pilotage Act provides the framework for ensuring that the eligibility, qualifications and training requirements for licensing and certifying pilots are not compromised in compulsory pilotage areas. The geographic nature of the pilotage areas and the oversight by four different pilotage authorities has resulted in a significant divergence in the requirements across Canada. By centralizing this function, the entry and training requirements will be consistent throughout the country. LICENSING AND CERTIFICATION - The Pilotage Act must consider a pilotage system that includes shorebased pilotage. The emergence of new technology and changes envisioned under the Oceans Protection Plan provide an opportunity to modernize pilotage, increase efficiencies and establish best practices for pilotage across Canada. Additional aids to navigation, improved charts and coastal surveillance would support the evolution of shore-based pilots, that will likely require a different skill set than required for existing pilots. The current licensing and certification program for pilots is rigorous but can be strongly influenced by the pilot corporations. The Pilotage Authorities and the pilot corporations are directly involved in the examination process, and the level of involvement is prescribed in the contracts between the pilot corporations and the Pilotage Authorities. As with pilotage waivers, certification and licensing of pilots must be done by an independent and unbiased authority, whereas the training of pilots could be done by the corporation to support its members in maintaining and upgrading their licenses. 12. Appoint a central Pilotage Authority or Transport Canada to establish pilot entry, certification and training requirements. COMPULSORY PILOTAGE AREAS Compulsory pilotage areas are defined in the Act as an area of water in which ships are subject to compulsory pilotage. The existing compulsory pilotage areas off the coast of British Columbia are not based on actual data or risk analysis and have remained in place since According to the Bernier Report of 1968, an Order in Council established a new Act on May 5, 1875 that created a Pilotage District which included the entire Coast of British Columbia with its Rivers and 10 P a g e

12 Harbours, extending from the shores of Washington Territory to the Northern Boundary of the Province. This District was constituted by the Pilotage Authority which was then compromised of five British Columbia citizens, four of whom had been members of the former Pilot Board), and made the payment of pilotage dues compulsory. Since 1875 the compulsory pilotage area on the west coast has remained unchanged. In 2008 the four Pilotage Authorities and Transport Canada developed a streamlined Pilotage Risk Management Methodology (PRMM) to assist with: Designating or reassessing compulsory pilotage areas; Determining the size and type of vessels subject to compulsory pilotage; and Adopting or modifying significant policies or practices such as double pilotage or the use of waivers. Since the revised PRMM was established there has not be a comprehensive review of the compulsory pilotage areas using the PRMM as it was intended. Industry supports the suggestion for regular reviews of compulsory pilotage areas and pilot boarding stations in view of new shipboard technology and coastal surveillance capabilities. Remote pilotage services augmented with modern bridge equipment and competent ship Masters, could result in moving pilot boarding areas closer to shore. This would provide an opportunity to potentially create tiers of pilotage based on the level of risk and potentially reduce the time on board for pilots, address concerns with thresholds for fatigue, mandatory vessel speed reductions in areas of interest, and eliminate the need for double pilotage. The risk assessment should take into consideration navigational hazards, size and types of vessels transiting the area, marine traffic density, access to communications and navigational aids, general weather patterns, and ability for real-time surveillance via radar or AIS. The process of the review should consider future state and identify if there are specific areas where remote pilotage will work under certain conditions and where it will not work. Through the efforts of the Oceans Protection Plan the identification and protection of low-risk marine corridors should assist with the transition to remote pilotage in areas where it is suitable. However, it should be clear that compulsory pilotage areas were never intended for creating or extending marine protected areas. The criteria and process for establishing and reviewing compulsory pilotage areas must be made clear in the Act. As shipboard and shore-based technologies evolve, a regular review of compulsory areas is encouraged to further refine compulsory areas. s 13. Require a review of compulsory pilotage areas every 5 years. 14. Consider tiers within the compulsory pilotage area, i.e. where remote pilotage can be introduced to reduce the distance that pilots are required to be on board. 11 P a g e

13 PILOTAGE RISK MANAGEMENT METHODOLOGY (PRMM) The PRMM is designed to support other scenarios such as: A situation where an accident or occurrence has raised safety concerns; The introduction of new technologies; A complaint by a stakeholder or the general public; or Proposed changes in traffic patterns. The PRMM has had limited use and mixed results across the Authorities. Any PRMM process must be fully supported by pilotage users as they would bear the cost of the process. The PRMM requires the process to be inclusive and transparent and in view of the federal government s duty to consult with First Nations, the PRMM has the potential to become much broader in scope and quite costly as a result. The PRMM, by virtue of the Authorities obligation to be financially self-sufficient, appears to have an industry bias, yet industry s involvement is minimal in most cases. The PRMM should be conducted by Transport Canada or the process should be funded fully by government to eliminate any perceived bias or influence. 15. Pilotage Risk Management Methodology exercises should be funded by Transport Canada to allow for greater application and avoid any potential bias. TECHNOLOGY There is agreement with the following statement in the Canada Transportation Act Review chaired by David Emerson, Pilots are essential to the safe operation of international vessels, ports, and marine corridors, but the governance of pilotage has not changed fundamentally since 1972, in spite of advances in technology. Canada has not fully taken advantage of these advances to improve efficiency and reduce overall costs the way some peer countries (such as Norway and Denmark) have done. The report further states, The Pilotage Authorities acknowledge that technology, including remote piloting of vessels and automated navigation systems, reduce the requirement to have pilots available at all times and in all circumstances. The pilot corporations have led the development of portable pilotage units (PPUs) and are very much supportive of the developments in e-navigation from a shipboard context. However, the future vision for pilotage includes greater ship-to-shore communications between the vessel and a shore-based pilot. The development the of the Canadian Coast Guard s e-navigation Maritime Information Portal will provide greater real-time decision support tools for pilots and vessel traffic controllers. Industry has fully funded the research and development of two generations of the portable pilotage units (PPUs) and has supplied every pilot with its own PPU at a cost of $25,000 each in the Pacific 12 P a g e

14 Region. PPUs are a decision support tool for the pilots to use on board the vessel and are subject to, like any portable device, regular updates and redundancy. Ship owners and operators have had no involvement in the development and no international or national standards exist for PPUs. It is unclear how PPUs are integrated in Bridge Resource Management and how widely accepted PPUs are internationally and questions remain as to whether these should be provided by industry. While innovation and new technology is supported in general, the research and development costs should not be borne by industry alone. The Pilotage Authorities and pilot corporations should have access to R&D grants to encourage greater uptake on new technology and facilitate better use of technology in pilotage. 16. Pilot corporations should also be eligible for research and development funds. WAIVERS The composition of ships crew and the level of skills and competency has changed with the introduction of improved technology and automation of shipboard systems. The criteria for issuing waivers should be reviewed on a periodic basis to ensure that the criteria recognize changes in crew, pilotage and ship-to-shore communications and surveillance capabilities. The contract between the Pacific Pilotage Authority and the BC Coast Pilots included a revenue guarantee for waivers granted. This creates a disincentive for a proper evaluation of waiver eligibility requirements. Ship masters that frequently call the same ports and terminals in Canada would be obvious candidates for pilotage waivers on certain segments of their transit in compulsory pilotage waters. Safety should not be compromised but the opportunity for certain Canadian and international ship captains to qualify for waivers should be considered. 17. The criteria for waivers should be reviewed and updated every five years. Labour Models Some pilotage regions have both employee pilots and pilot corporations, but in all cases they are prevented from competing for services in the same jurisdiction. The advantage and disadvantages of competitive pilotage need to be weighed carefully. In the United States pilot associations are required to maintain training programs, pilot boats, dispatch services, rotation systems, and all other types of equipment and support systems needed for a modern, efficient and safe pilotage operation. Pilots could not make the investments necessary for these things in a shared or competitive environment. 13 P a g e

15 Within the pilotage model there is an opportunity to look at further segmentation within the pilotage areas. In the Pacific Region, the Fraser River pilots are employees while the BC Coast Pilots Ltd. is a corporation that provide pilotage services for the entire coast. The cost of maintaining currency in the compulsory pilotage area for all 105 pilots along the coast is costly, and in the absence of significant traffic volumes outside of the Lower Mainland, high transportation costs and callbacks have resulted. The recent vessel speed reduction trial in Haro Strait initiated by the Port of Vancouver to better understand underwater noise impacts highlighted concerns with the increasing demand on pilotage resources. The speed reduction has the potential for transits into Vancouver to exceed the eight-hour transit time and incur excess pilotage fees. Suggestions for the development of a pool of harbour or ship docking pilots that would join the ship at a location within the port authority s jurisdiction could alleviate the pressures of maintaining these transits within eight hours. Pilot fatigue, excess hours and callbacks could be avoided. With the potential for more than one pilot corporation to share a compulsory pilotage area with employee pilots, the Pilotage Authorities would have to continue providing the dispatch of pilots to facilitate the efficient transfer between pilotage areas. The pilotage picture would also contribute considerably to Canada s overall domain awareness and pro-active vessel management activities. FINAL OFFER SELECTION - Retaining the final offer settlement provision is supported as this is a mechanism required to avoid any disruption to Canada s trade. However, there needs to be greater visibility on Pilotage Authorities contracts and fees associated with the service provided. Mediators and final offer selectors should be appointed by Transport Canada and obligated to engage with industry to gain a better understanding of the state of the industry and the competitiveness of Canadian gateways. 18. Maintain the final offer selection to avoid disruption in marine commerce. Tariff Setting Process The tariff setting process varies between Pilotage Authorities and is done on an irregular basis. The challenge is always the timing of when the tariff is agreed and when it is published and brought into effect through the Canada Gazette process. Under section 33(3) the Pilotage Act, Pilotage Authorities are required to operate on a self-sustaining financial basis with fees that shall be fair and reasonable. Overall the tariff setting process has worked well where there is a degree of transparency on the operations of the Pilotage Authorities and contract negotiations. SERVICES FEE ACT The new Services Fee Act enacted by Bill C-44, The Budget Implementation Act, 2017, No. 1, repeals the User Fee Act to simplify the process by which federal entities can apply for a fee 14 P a g e

16 adjustment. The Service Fee Act may be the appropriate legislation by which the pilotage authorities can set tariffs in a fair, transparent and expedited manner. Under the Services Fee Act, fee proposals must include a rationale for the fee and identify factors taken into account in determining fees and establish performance standards where applicable. Consultation must be with interested persons and organization and obligates the pilotage authority to respond to any questions or positions taken within 30 days. 19. Evaluate if the Services Fee Act will serve as a better mechanism for fee adjustments. DISPUTE RESOLUTION The number of tariff disputes under the Canadian Transportation Agency (CTA) has been small over the years. The concern with most recent challenges to proposed tariffs is the length of time taken to resolve a dispute. The recent dispute between the Pacific Pilotage Authority and the Shipping Federation of Canada was resolved before the dispute was called before the CTA panel. However, the delay by the CTA resulted in an unnecessary delay to the PPA s planned implementation of the tariff adjustments, resulting in a loss of budgeted revenue of $140k. The dispute mechanism through the Canada Transportation Agency is expected to improve with proposed amendments under Bill C-49, Transportation Modernization Act, to provide strict timelines for tariff disputes. Complaints under the Services Fee Act results in a three-person panel being established within 30 days and a report issued within 90 days after it is established. The cost of the panel would be paid by the Pilotage Authorities. 20. Consider dispute resolution process under the Services Fee Act if the CTA amendments establishing clear timelines are not passed. OTHER SOURCES OF REVENUE The Pilotage Authorities have been called upon over the years to provide technical expertise to various project proponents. Pilotage Authorities are fully funded by the fees paid by industry and some of the services currently provided by the Pilotage Authorities do not directly benefit industry. The Pilotage Authorities should have the ability to charge other fees for consulting or managing other services such as pilotage waivers, on a cost recovery basis. 21. Allow the Pilotage Authorities to set tariffs and/or recover fees for efforts that are not associated to the delivery of pilotage direct services. 15 P a g e

17 Economic and Public Policy Considerations The economic and public policy considerations are important as tension mounts in communities that feel threatened by the presence of international shipping activity. Pressures to reduce the marine transportation s impact on the marine environment will be transformative over the next few years. The federal government s plans to increase coastal protection to 10% by 2020 will be challenging as there are different perceptions of what marine conservation entails. Speed reductions through sensitive ecosystems are expected to persist as demonstrated with the recent mandatory speed reduction in the St. Lawrence Seaway to protect the North Atlantic Right Whales and reduce vessels strikes. The imposition of precaution measures will likely be swift in all areas where species protected under the Species at Risk Act exist and are threatened. It is important that the Pilotage Act, the Pilotage Authorities and pilot corporations have the ability to adapt to new precautionary measures. Failing to do so, generally implies greater costs to industry and a competitive disadvantage for Canada. Under the Oceans Protection Plan there is an expectation that more scientific data and government resources will be available and that clear low-risk marine corridors will be established. Enhanced aids to navigation, areas response planning, and pro-active vessel management are expected to provide continuous monitoring and protection of the marine corridors. Real-time and predictive modelling should support better decisions resulting in supply chain efficiencies. The United States is Canada s largest competitor and shares critical transportation links throughout North America. The cooperative approach to vessel traffic through shared waterways must continue to support the diverging views of public policy. Emerging Issues As ports and vessel size continue to expand, greater oversight is required to coordinate and manage vessel traffic and mitigate any potential safety and environment hazards. Alternative means of providing pilotage service must be considered in the Arctic where resources are limited in general. There is an increased awareness of cybersecurity threats, risks and potential consequences for ships, ports and cargo handling operations. The need for international and national regulations, and best practices to ensure the integrity of shipboard systems cannot be ignored. The introduction of portable devices and new technologies that interact with shipboard systems must be carefully considered. In implementing new technologies, cybersecurity should be carefully considered, along with other important issues to mitigate risk and increase cybersecurity resilience. 16 P a g e

18 ENFORCEMENT - The Authorities can issue fines of up to $5,000 to any owner, master or person in charge of a ship subject to compulsory pilotage that proceeds through a compulsory pilotage area without a licensed pilot or waiver. The $5,000 fines are insufficient as often the cost of pursuing a summary offence exceed the cost of the fine. Non-compliance cannot be ignored and it is suggested that the level of fines be increased to a sufficient level whereby the authorities can at least be compensated for the costs associated in pursuing the offence. Administrative Monetary Penalties (AMPs) are punitive and are often wrongly applied based on experience with AMPs issued by other government departments. The Pilotage Authorities have developed other penalties for failing not to adhere to the dispatch guidelines. The administration and the appeal process for AMPs would not drive any improvements in pilotage services and are not supported. 22. Increase the level of fines for non-compliance under the Pilotage Act to ensure that the cost of pursuing a fine are adequately recovered. 17 P a g e